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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
Alliance Fiber Optic Products, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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AFOP LOGO
ALLIANCE FIBER OPTIC PRODUCTS, INC.
735 NORTH PASTORIA AVENUE
SUNNYVALE, CALIFORNIA 94085
(408) 736-6900
April 18, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Alliance Fiber Optic Products, Inc. that will be held on Friday, May 18, 2001,
at 2:00 p.m. at the Sheraton Sunnyvale Hotel, 1100 North Mathilda Avenue,
Sunnyvale, California.
The formal notice of the Annual Meeting and the Proxy Statement have been
made a part of this invitation.
After reading the Proxy Statement, please mark, date, sign and return, at
your earliest convenience, the enclosed proxy in the enclosed prepaid envelope,
to ensure that your shares will be represented. YOUR SHARES CANNOT BE VOTED
UNLESS YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING
IN PERSON. Your vote is important, so please return your proxy promptly.
A copy of our 2000 Annual Report to Stockholders is also enclosed.
The Board of Directors and management look forward to seeing you at the
meeting.
Sincerely yours,
/s/ PETER C. CHANG
Peter C. Chang
Chairman, President and
Chief Executive Officer
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ALLIANCE FIBER OPTIC PRODUCTS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2001
------------------------
To the Stockholders of Alliance Fiber Optic Products, Inc.:
The Annual Meeting of Stockholders of Alliance Fiber Optic Products, Inc.,
a Delaware corporation (the "Company"), will be held at the Sheraton Sunnyvale
Hotel, 1100 North Mathilda Avenue, Sunnyvale, California, on Friday, May 18,
2001, at 2:00 p.m. Pacific Daylight Time, for the following purposes:
1. To elect two Class I directors to serve until the 2004 Annual Meeting of
Stockholders and thereafter until their successors are elected and
qualified;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors; and
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment of the Annual Meeting.
Stockholders of record as of the close of business on March 30, 2001 are
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. A complete list of stockholders entitled to vote at the Annual Meeting
will be available at the Secretary's office, 735 North Pastoria Avenue,
Sunnyvale, California, for ten days before the meeting.
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE MEETING. EVEN IF
YOU PLAN TO ATTEND THE MEETING, WE HOPE THAT YOU WILL PROMPTLY MARK, SIGN, DATE
AND RETURN THE ENCLOSED PROXY. THIS WILL NOT LIMIT YOUR RIGHT TO ATTEND OR VOTE
AT THE MEETING.
By Order of the Board of Directors
/s/ PETER C. CHANG
Peter C. Chang
Secretary
April 18, 2001
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ALLIANCE FIBER OPTIC PRODUCTS, INC.
735 NORTH PASTORIA AVENUE
SUNNYVALE, CALIFORNIA 94085
(408) 736-6900
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Alliance Fiber Optic Products, Inc., a Delaware
corporation (the "Company"), of proxies in the accompanying form to be used at
the Annual Meeting of Stockholders of the Company to be held at the Sheraton
Sunnyvale Hotel, 1100 North Mathilda Avenue, Sunnyvale, California, on Friday,
May 18, 2001, at 2:00 p.m. Pacific Daylight Time, and any postponement or
adjournment thereof (the "Annual Meeting").
REVOCATION OF PROXIES
The shares represented by the proxies received in response to this
solicitation and not properly revoked will be voted at the Annual Meeting in
accordance with the instructions therein. A stockholder who has given a proxy
may revoke it at any time before it is exercised by filing with the Secretary of
the Company a written revocation or a duly executed proxy bearing a later date
or by voting in person at the Annual Meeting. On the matters coming before the
Annual Meeting for which a choice has been specified by a stockholder on the
proxy card, the shares will be voted accordingly. If no choice is specified, the
shares will be voted "FOR" the election of the two nominees for director listed
in this Proxy Statement and "FOR" the ratification of the Company's independent
auditors.
WHO CAN VOTE
Stockholders of record at the close of business on March 30, 2001 (the
"Record Date"), are entitled to vote at the Annual Meeting. As of the close of
business on that date, the Company had 34,714,225 shares of common stock, $0.001
par value (the "Common Stock"), outstanding. The presence in person or by proxy
of the holders of a majority of the Company's outstanding Common Stock
constitutes a quorum for the transaction of business at the Annual Meeting. Each
holder of Common Stock is entitled to one vote for each share held as of the
Record Date.
REQUIRED VOTE
Directors are elected by a plurality vote. The two nominees for director
who receive the most votes cast in their favor will be elected to serve as
directors. The other proposal submitted for stockholder approval at the Annual
Meeting will be decided by the affirmative vote of the majority of the shares
present in person or represented by proxy at the Annual Meeting and entitled to
vote on such proposal. Abstentions with respect to any proposal are treated as
shares present or represented and entitled to vote on that proposal and thus
have the same effect as negative votes. If a broker which is the record holder
of shares indicates on a proxy that it does not have discretionary authority to
vote on a particular proposal as to such shares, or if shares are not voted in
other circumstances in which proxy authority is defective or has been withheld
with respect to a particular proposal, these non-voted shares will be counted
for quorum purposes but are not deemed to be present or represented for purposes
of determining whether stockholder approval of that proposal has been obtained.
This Proxy Statement and the accompanying form of proxy are being mailed to
stockholders on or about April 18, 2001.
IMPORTANT
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE SO THAT, WHETHER YOU
INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, YOUR SHARES CAN BE VOTED.
THIS WILL NOT LIMIT YOUR RIGHTS TO ATTEND OR VOTE AT THE ANNUAL MEETING.
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PROPOSAL 1
ELECTION OF DIRECTORS
Pursuant to Article VI of the Company's Certificate of Incorporation, the
Board of Directors is divided into three classes. Each class consists of two
directors. Two Class I directors will be elected at the Annual Meeting and will
serve until the 2004 Annual Meeting. The Class II directors will continue to
serve until the 2002 Annual Meeting and the Class III directors will continue to
serve until the 2003 Annual Meeting.
The two nominees to fill the Class I director seats to serve until the 2004
Annual Meeting are Peter C. Chang and R. David Dicioccio. If either nominee is
unable or declines to serve as director at the time of the Annual Meeting, an
event not now anticipated, proxies will be voted for any nominee designated by
the Board of Directors to fill the vacancy.
Biographical information concerning each of the nominees is set forth
below.
CLASS I
Peter C. Chang, 43, has served as our Chairman of the Board, Chief
Executive Officer and President since our formation in December 1995. From 1990
to 1995, Mr. Chang was Division Manager at Hon Hai Holding. From 1984 to 1988,
he was an engineer at AlliedSignal Inc. and from 1988 to 1990 was a member of
the technology staff at Lucent Bell Labs. Mr. Chang received a B.S. in
Mechanical Engineering from National Taiwan University and an M.S. in Mechanical
Engineering from Notre Dame University.
R. David Dicioccio, 42, has served as a director since March 2000. Since
November 1998, Mr. Dicioccio has served as Managing Member of RDD Associates,
LLC, an investor in and strategic advisor to early stage and established
technology companies. From 1992 to 1998, he served as Managing Director and Head
of the Technology and Communications Investment Banking practice at PaineWebber
Incorporated. He has served as a director of Tvia, Inc. and Biogenex
Laboratories, Inc. since March 2000 and February 2001, respectively. Mr.
Dicioccio received an A.B. in Political Science from Stanford University and an
M.B.A. from Harvard University.
Biographical information concerning the remaining members of the Board of
Directors is set forth below.
CLASS II
Peter T. Morris, 44, has served as a director since July 2000. From 1992 to
the present, he has been a general partner of New Enterprise Associates, a
venture capital firm. Mr. Morris also serves on the boards of directors of
Accelerated Networks, Inc., Packeteer, Inc., Virata Corporation and several
private companies. Mr. Morris received both a B.S. in Electrical Engineering and
an M.B.A. from Stanford University.
Michael Tung, 45, has served as a director since June 2000. From January
2001 to the present, Mr. Tung has served as the Chief Financial Officer of
Fibera, Inc, a fiber optics company. From July 2000 to December 2000, Mr. Tung
served as the Chief Financial Officer of Foxconn Optical Technology Inc. From
1992 to June 2000 he was the Chief Financial Officer of Acer America
Corporation. Mr. Tung received a B.A. in Accounting from Tan Kang University in
Taiwan.
CLASS III
Gwong-Yih Lee, 38, has served as a director since August 2000. Since
September 1999, when Cisco Systems acquired TransMedia Communications, Inc., Mr.
Lee has served as Senior Director and General Manager at Cisco Systems in the
Multiservice Switching Business Unit for TransMedia. In March 1998, Mr. Lee
established TransMedia and served as its President and Chief Executive Officer
until September 1999. Prior to establishing TransMedia, Mr. Lee established
DigiCom Systems, Inc. in May 1987 and served as its President and Chief
Executive Officer until March 1998. Mr. Lee received a B.S. in Control
Engineering from National Chiao-Tung University in Taiwan and an M.S. in
Electrical Engineering from New York University.
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James C. Yeh, 43, has served as a director since our formation in December
1995. In 1995, Mr. Yeh co-founded Advis, Inc., a developer of video
communication and information appliance technologies, and since January 1996 he
has served as its Chairman of the Board. Since January 1991, Mr. Yeh has served
as President of Matics Computer Systems, Inc., a computer PC systems and
peripherals company. Mr. Yeh holds a B.S. in Mathematics from Tamkang University
and an M.S. in Systems Science and Mathematics from Washington University, Saint
Louis.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF PETER C.
CHANG AND R. DAVID DICIOCCIO AS THE CLASS I DIRECTORS OF THE COMPANY.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held four meetings during the year ended December
31, 2000. All directors attended at least 75% of the aggregate number of
meetings of the Board of Directors and of the committees on which such directors
serve.
COMPENSATION COMMITTEE
Number of Members: Two
Members: Mr. Dicioccio
Mr. Yeh
Number of Meetings: None
Functions: Determines salaries, incentives and other forms
of compensation for directors, officers and
employees.
AUDIT COMMITTEE
Number of Members: Three
Members: Mr. Lee
Mr. Morris
Mr. Yeh
Number of Meetings: None
Functions: Reviews the Company's internal accounting
procedures and financial management practices
with the Company's independent auditors.
Selects independent auditors to audit the
Company's books and records, subject to
approval of the Board of Directors.
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DIRECTOR COMPENSATION
Except as otherwise described below, the Company has not paid any cash
compensation to members of the Board of Directors for their services as
directors.
We reimburse directors for reasonable expenses in connection with
attendance at meetings of the Board of Directors and committee meetings.
Directors who are not employees also receive an initial grant of an option to
purchase 30,000 shares of Common Stock at the fair market value of the Common
Stock as determined by the Board of Directors on the date of grant, which vests
ratably over 36 months. On the first business day following the third
anniversary of the date of grant of the initial option, each non-employee
director shall receive an option to purchase 30,000 shares of Common Stock at
the fair market value of the Common Stock, which shall vest ratably over 36
months.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
R. David Dicioccio and James C. Yeh serve as members of the Compensation
Committee. Since January 2000, R. David Dicioccio has provided financial
advisory services as a consultant in exchange for an option to purchase 150,000
shares of Common Stock at an exercise price of $0.20 per share. Mr. Dicioccio's
option vests pro-rata over a two year period beginning March 1, 2000. As of
December 31, 2000, 93,750 of these shares were unvested and the fair value of
the unvested portion was determined to be $547,500 using the Black-Scholes
option pricing model.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 2001 as
to shares of the Common Stock beneficially owned by: (i) each person who is
known by the Company to own beneficially more than 5% of its Common Stock, (ii)
each of the Company's directors, (iii) each of the Company's executive officers
named under "Executive Compensation -- Summary Compensation Table," and (iv) all
directors and executive officers of the Company as a group. Ownership
information is based upon information furnished by the respective individuals or
entities, as the case may be. Unless otherwise noted below, the address of each
beneficial owner is c/o Alliance Fiber Optic Products, Inc., 735 North Pastoria
Avenue, California 94085. The percentage of common stock beneficially owned is
based on 34,714,225 shares outstanding as of March 30, 2001. In addition, shares
issuable pursuant to options which may be exercised within 60 days of March 31,
2001 are deemed to be issued and outstanding and have been treated as
outstanding in calculating the percentage ownership of those individuals
possessing such interest, but not for any other individuals. Thus, the number of
shares considered to be outstanding for the purposes of this table may vary
depending on the individual's particular circumstances.
NUMBER OF SHARES PERCENTAGE OF
OF COMMON STOCK COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) BENEFICIALLY OWNED
------------------------------------ --------------------- ------------------
Directors and Named Executive Officer:
Peter C. Chang(2)...................................... 5,060,000 14.6%
R. David Dicioccio(3).................................. 255,833 *
Gwong-Yih Lee(4)....................................... 25,833 *
Peter T. Morris(5)(13)................................. 2,005,833 5.8
Michael Tung(6)........................................ 5,833 *
James C. Yeh(7)(11).................................... 3,035,833 8.7
David A. Hubbard(8).................................... 425,000 1.2
5% Stockholders:
Foxconn Holding Limited(9)............................. 8,000,000 23.0
Capital Group International, Inc.(10).................. 3,546,000 10.2
Entities affiliated with CPY & Associates(11).......... 2,980,000 8.6
Transpac Nominees PTE Ltd.(12)......................... 2,900,000 8.4
Entities affiliated with New Enterprise
Associates(13)...................................... 2,000,000 5.8
All Directors and Executive Officers as a group (11
persons)(14)........................................ 12,390,667 35.1
- ---------------
* Less than 1%.
(1) To the Company's knowledge, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in the notes to this table.
(2) The 5,060,000 shares include 40,000 shares held in the name of Mr. Chang's
minor children and 2,000,000 shares held in the name of the Chang Family
LLC. In addition, as of March 31, 2001, the 5,060,000 shares include
708,334 shares subject to the right of repurchase, which right the Company
may exercise upon Mr. Chang's termination of employment, and 354,167 shares
subject to acceleration of vesting in connection with a change of control.
(3) Includes 75,000 shares subject to the right of repurchase, which the
Company may exercise upon Mr. Dicioccio's termination as a consultant.
These 75,000 shares are also subject to acceleration of vesting in
connection with a change of control. Includes options to purchase 5,833
shares exercisable within 60 days of March 31, 2001.
(4) Consists of 20,000 shares held in the name of the Lee Trust. Mr. Lee and
his wife, Angela Lee, as trustees, have dispositive and voting power for
the shares held by the Lee Trust. Includes options to purchase 5,833 shares
exercisable within 60 days of March 31, 2001.
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(5) Includes options to purchase 5,833 shares exercisable within 60 days of
March 31, 2001.
(6) Includes options to purchase 5,833 shares exercisable within 60 days of
March 31, 2001.
(7) The 3,035,833 shares include 25,000 shares and options to purchase 25,000
shares exercisable within 60 days of March 31, 2001 held in the name of Mr.
Yeh's wife, Chiu Lan Sun. Also includes options to purchase 5,833 shares
exercisable within 60 days of March 31, 2001.
(8) Includes 100,000 shares subject to the right of repurchase, which the
Company may exercise upon Mr. Hubbard's termination of employment. Also
includes options to purchase 100,000 shares exercisable within 60 days of
March 31, 2001.
(9) Principal address is #2 Tsu-yu Street, Tu-cheng, Taipei Hsien, Taiwan. The
board of directors of Foxconn Holding Limited has dispositive power for the
shares and has delegated voting power to Ms. Chiu Lian Huang.
(10) According to a Schedule 13G dated March 30, 2001 filed jointly by Capital
Group International, Inc. and Capital Guardian Trust Company, each entity
holds sole voting power as to 2,849,000 shares and sole dispositive power
as to 3,546,000. Each disclaims beneficial ownership.
(11) According to Schedule 13G dated February 15, 2001 filed jointly by James C.
Yeh and CPY & Associates, the 3,005,000 shares include 2,000,000 shares
held by CPY & Associates, 400,000 shares held by CPY USA I, 275,000 shares
held by CPY USA II, 155,000 shares held by CPY International and 150,000
shares held by CPY California. CPY & Associates, CPY USA I, CPY USA II, CPY
International and CPY California are affiliates since they are under the
common control of Mr. Yeh. Mr. Yeh is the manager of CPY & Associates and
has dispositive and voting power for the shares held by CPY & Associates,
CPY USA I, CPY USA II, CPY International and CPY California. Mr. Yeh
disclaims beneficial ownership of these shares except to the extent of his
pecuniary interest therein. Principal address is 45036 Cougar Circle,
Fremont, CA 94539.
(12) According to a Schedule 13G dated February 14, 2001, Mr. Swan Chen has
dispositive and voting power for the shares held by Transpac Nominees PTE
Ltd. Principal address is 6 Shenton Way #20-09, DBS Building Tower Two,
Singapore 068809.
(13) According to a Schedule 13G filed jointly by New Enterprise Associates 9,
Limited Partnership, NEA Partners 9, Limited Partnership, Stewart Alsop II,
Peter J. Barris, Nancy L. Dorman, Ronald M. Kase, C. Richard Kramlich,
Arthur J. Marks, Thomas C. McConnell, Peter T. Morris, John M. Nehra,
Charles W. Newhall III, and Mark W. Perry, each of the aforementioned the
general partners of New Enterprise Associates 9, L.P. and NEA Ventures 2000
has shared dispositive and shared voting power for the 1,999,546 shares
held by New Enterprise Associates 9, L.P. Each of the aforementioned also
has shared dispositive and shared voting power for the 454 shares held by
NEA Ventures 2000 L.P. Mr. Morris may be deemed to beneficially own
1,999,546 shares owned by New Enterprise Associates 9, L.P., 454 shares
owned by NEA Ventures 2000, L.P. Mr. Morris disclaims beneficial ownership
as to 2,000,000 of these shares, except to the extent of his pecuniary
interest there. The address of the principal business office of NEA 9, NEA
Partners 9, Dorman, Marks, Nehra and Newhall is New Enterprise Associates,
1119 St. Paul Street, Baltimore, Maryland 21202. The address of the
principal business office of Alsop, Kase, Kramlich, McConnell, Morris and
Perry is New Enterprise Associates, 2490 Sand Hill Road, Menlo Park,
California 94025. The address of the principal business office of Barris is
One Freedom Square, 11951 Freedom Drive, Suite 1240, Reston, Virginia
20190.
(14) Includes 604,167 shares subject to options exercisable within 60 days of
March 31, 2001, and 2,013,334 shares subject to the right of repurchase
upon the officers' or directors' termination as of March 31, 2001.
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EXECUTIVE COMPENSATION
The following table summarizes all compensation paid to the Company's Chief
Executive Officer and our named executive officer. The total annual salary and
bonus paid to each of our other executive officers did not exceed $100,000 for
services rendered in all capacities to the Company for the fiscal years ended
December 31, 2000 and 1999.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING
NAME AND POSITION YEAR SALARY BONUS OPTIONS
----------------- ---- -------- ------- ------------
Peter C. Chang.................................... 2000 $174,505(1) $16,000(2) 1,125,000
Chief Executive Officer and President 1999 66,000 -- 275,000
David A. Hubbard.................................. 2000 121,163 22,000(3) 100,000
Vice President, Sales and Marketing 1999 65,082 -- 100,000
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(1) Mr. Chang's salary in 2000 includes a one-time payment in 2001 of $8,769 for
paid time off accrued.
(2) Mr. Chang's bonus was earned in fiscal 2000 and paid in fiscal 2001.
(3) Includes a $12,000 bonus earned in fiscal 2000 and paid in fiscal 2001.
STOCK OPTIONS
The following table sets forth certain information for the fiscal year
ended December 31, 2000 with respect to stock options granted to and exercised
by the individuals named in the Summary Compensation Table above. The exercise
price is equal to 100% of the fair market value of our Common Stock on the date
of grant. The options have a term of 10 years, subject to earlier termination in
certain events related to termination of employment.
OPTION GRANTS IN 2000
INDIVIDUAL GRANTS
-------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ---------------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
---- ---------- ------------- -------- ---------- ------------ ------------
Peter C. Chang........ 1,125,000(1) 22.1% $0.20 9/16/2009 $10,770,039 $17,282,762
David A. Hubbard...... 100,000(2) 2.0 0.20 8/6/2009 957,337 1,536,245
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(1) Includes 708,334 shares subject to repurchase, which the Company may
exercise upon Mr. Chang's termination of employment.
(2) These options are all subject to repurchase, which the Company may exercise
upon Mr. Hubbard's termination of employment.
(3) The 5% and 10% assumed rates of appreciation are suggested by the rules of
the Securities and Exchange Commission and do not represent our estimate or
projection of our future Common Stock price. There can be no assurance that
any of the values reflected in the table will be achieved.
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AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND 2000 YEAR END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 2000(#) DECEMBER 31, 2000(2)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE(#) REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- --------------- ----------- ------------------------- -------------------------
Peter C. Chang.............. 1,480,000 $12,000 --/-- $ --/$ --
David A. Hubbard............ 325,000 33,750 100,000/75,000 600,000/450,000
- ---------------
(1) Calculated on the basis of the fair market value of the underlying
securities at the exercise date minus the exercise price.
(2) Calculated on the basis of the fair market value of the underlying
securities at December 31, 2000 ($6.00 per share) minus the exercise price.
INDEBTEDNESS OF MANAGEMENT
The individuals listed below elected to pay the exercise price for some of
their outstanding options with full recourse promissory notes secured by the
Common Stock underlying the options. All of the notes bear interest at 6.50% per
year, except for the note from John M. Harland, which bears interest at 7.00%
per year. As of March 31, 2001, the principal of and interest on these notes
have not been paid. The interest accrued to date and the original total
principal amounts of the promissory notes executed by each executive officer in
favor of the Company are:
INTEREST
SHARES ACCRUED AS OF ORIGINAL
EXECUTIVE OFFICER NOTE DATE PURCHASED NOTE DUE MARCH 31, 2001 NOTE AMOUNT
----------------- ---------------- --------- ---------------- -------------- -----------
Peter C. Chang........... January 1, 2000 355,000 January 1, 2004 $ 4,794 $ 59,000
Peter C. Chang........... January 30, 2000 125,000 January 30, 2004 1,896 25,000
Peter C. Chang........... May 2, 2000 1,000,000 January 1, 2004 11,917 200,000
Gregory Barnes........... June 9, 2000 250,000 June 9, 2004 6,568 125,000
Gregory Barnes........... August 25, 2000 50,000 August 25, 2004 3,884 100,000
John M. Harland.......... July 26, 2000 330,000 July 26, 2004 15,708 330,000
David A. Hubbard......... April 5, 2000 225,000 April 4, 2004 723 11,250
David A. Hubbard......... August 17, 2000 100,000 August 17, 2004 4,035 100,000
Wei-shin Tsay............ August 25, 2000 500,000 August 25, 2004 38,838 1,000,000
CHANGE OF CONTROL ARRANGEMENTS
The stock option agreement with R. David Dicioccio provides that stock
options granted to Mr. Dicioccio will automatically vest if his relationship
with the Company is involuntarily terminated after a change of control of the
Company, as those terms are defined in the agreement. The stock option agreement
with Peter C. Chang provides that one half of the unvested stock options granted
to Mr. Chang will automatically vest upon a change of control of the Company, as
defined in the agreement. The stock option agreement with John M. Harland
provides for the automatic vesting of the number of shares calculated on a pro
rata basis as if vesting occurred on a monthly basis over 48 months beginning on
the vesting commencement date, plus 25% of the unvested shares subject to the
option, in the event that, in contemplation of, or at any time after a change of
control of the Company, Mr. Harland's employment is involuntarily terminated
other than for cause or is constructively terminated, as those terms are defined
in the agreement. As of March 31, 2001, an aggregate of 559,792 unvested options
to purchase Common Stock are subject to change of control provisions.
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REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee, established in September 1999, is comprised of
two non-employee directors. The Compensation Committee is responsible for
determining salaries, incentives and other forms of compensation for directors
and executive officers, as well as administering various incentive compensation
and benefit plans. Prior to fiscal 2000, the responsibilities of the
Compensation Committee were fulfilled by the full Board of Directors.
COMPENSATION PHILOSOPHY
In November 2000, the Company completed its initial public offering of its
Common Stock and became a reporting company at that time. It is the Compensation
Committee's philosophy to link executive compensation directly to the interests
of the Company's stockholders and therefore to financial objectives that the
Compensation Committee believes are primary determinants of long-term
stockholder value. To conserve cash and encourage growth during the first years
of the Company's existence, our executive compensation in previous years has
been based on the "start-up" model, with a relatively low percentage of
compensation comprised of base salary and a higher percentage of stock options.
As we continue to grow and develop, we are shifting our compensation plans to
mirror those of other publicly traded companies in our sector and to reflect the
size and value of the Company. In order to attract and retain highly talented
executives, the Company will offer base salaries that are competitive with
salary levels within its industry. The components of executive officer
compensation, base salary, bonus and stock options, are discussed below.
It is our policy generally to qualify executive compensation for
deductibility under section 162(m) of the Internal Revenue Code, which provides
that, for purposes of the regular income tax and the alternative minimum tax,
the otherwise allowable deduction for compensation paid or accrued with respect
to a covered employee of a publicly-held corporation is limited to no more than
$1 million per year. We do not expect that the compensation to be paid to any of
our executive officers for fiscal 2001 will exceed the $1 million limit.
EXECUTIVE OFFICER BASE SALARY
The Compensation Committee determined the base salaries and bonuses of the
executive officers for fiscal 2001. The Compensation Committee reviews salaries
recommended by the Chief Executive Officer for executive officers other than the
Chief Executive Officer. The Compensation Committee's philosophy is that a
certain portion of executive officer compensation should be contingent upon the
Company's performance and an individual's contribution to the Company's success
in meeting critical objectives. The Compensation Committee sets the salary and
bonus potential of each executive officer on a case by case basis. The
Compensation Committee, together with the Chief Executive Officer, considers
market information and the base salaries and other incentives paid to executive
officers of other companies within its industry. Final decisions on base salary
adjustments for executives other than the Chief Executive Officer are made with
the Chief Executive Officer's involvement. For fiscal 2001, the Compensation
Committee determined that base salaries would be increased in order to align the
compensation of the executive officers with executive officers of its
competitors.
EXECUTIVE OFFICER BONUSES
Bonuses paid for fiscal 2000 were determined on a case by case basis. Each
executive officer was evaluated individually to determine the bonus for the
fiscal year, which was based on performance criteria. In January 2001, the
Compensation Committee adopted an executive bonus plan. Pursuant to the terms of
the new plan, bonuses for fiscal 2001 are tied to corporate performance,
individual performance, and each executive officer's base salary. Executive
officers will also be eligible to receive an additional stock option grant that
will be based on overall company performance.
9
13
STOCK OPTION GRANTS
The Compensation Committee is responsible for administering our 2000 Stock
Incentive Plan for executive officers, under which it grants options to purchase
our Common Stock with an exercise price equal to the fair market value of a
share of our Common Stock on the date of grant. The Non-Executive Compensation
Committee develops and monitors compensation arrangements and grants option
awards for employees who are not officers or directors. The Compensation
Committee believes that stock ownership by the Company's executive officers
aligns their interests with those of our stockholders and provides its executive
officers with substantial motivation to manage the Company well. Accordingly, a
considerable portion of the Company's executive officers' compensation consists
of stock options. When determining the size of an option grant to an executive
officer, the Compensation Committee, after consulting with the Chief Executive
Officer, considers the executive officer's and the Company's performance, the
executive officer's level and responsibilities within the Company, the executive
officer's base salary and the size of option grants to executive officers in
similar positions throughout the industry.
The Company's employees generally are also able to participate in the
Company's 2000 Employee Stock Purchase Plan. Under the Employee Stock Purchase
Plan, each of the executive officers may purchase up to 1,333 shares of our
Common Stock in a six month period at a discount to the market price. The number
of shares that may be purchased by each participant is limited by applicable tax
laws.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of the Chief Executive Officer is determined using the
same criteria as for the other executive officers. For fiscal 2001, the
Compensation Committee set Mr. Chang's salary at $200,000. In fiscal 2000, Mr.
Chang's salary was increased from $66,000 to $160,000. In fiscal 2000, Mr. Chang
also received a $16,000 bonus and he was awarded options to purchase 1,125,000
shares of Common Stock, 416,666 of which are fully vested and the remainder of
which vest monthly over the next 33 months.
COMPENSATION COMMITTEE
R. David Dicioccio
James C. Yeh
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STOCK PRICE PERFORMANCE GRAPH
The following graph shows the two-month cumulative total stockholder return
assuming the investment of $100 on November 21, 2000 (the day of the Company's
initial public offering) in each of the Company's Common Stock, the Nasdaq
Composite Index and the Nasdaq Telecommunications Index. The comparisons in the
table are required by the Securities and Exchange Commission and are not
intended to forecast or be indicative of possible future performance of the
Company's Common Stock.
[PERFORMANCE GRAPH]
ALLIANCE FIBER OPTIC NASDAQ
PRODUCTS TELECOMMUNICATIONS NASDAQ COMPOSITE
-------------------- ------------------ ----------------
11/21/00 100.00 100.00 100.00
12/2/00 69.14 92.20 92.12
12/8/00 75.31 105.54 101.60
12/15/00 66.67 98.04 92.40
12/22/00 50.00 87.16 87.66
12/29/00 59.26 88.21 86.04
11/21/00 12/2/00 12/8/00 12/15/00 12/22/00 12/29/00
-------- ------- ------- -------- -------- --------
Alliance Fiber
Optic Products $100.00 $69.14 $75.31 $66.67 $50.00 $59.26
Nasdaq
Telecommunications 100.00 92.20 105.54 98.04 87.16 88.21
Nasdaq Composite 100.00 92.12 101.60 92.40 87.66 86.04
11
15
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee operates under a written charter adopted by the Board
of Directors on September 7, 2000 and adopted by the Audit Committee on January
30, 2001. A copy of the Audit Committee Charter is attached as Appendix A to
this Proxy Statement. The members of the Audit Committee are James C. Yeh
(Chairman), Gwong-Yih Lee and Peter T. Morris, each of whom meets the
independence standards established by The Nasdaq Stock Market.
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors and is responsible for providing independent,
objective oversight of the Company's accounting functions and internal controls.
The Audit Committee reviewed and discussed the audited financial statements
contained in the 2000 Annual Report on Form 10-K with the Company's management
and its independent auditors. Management is responsible for the financial
statements and the reporting process, including the system of internal controls.
The independent auditors are responsible for expressing an opinion on the
conformity of those financial statements with accounting principles generally
acceptable in the United States.
The Audit Committee met privately with the independent auditors, and
discussed issues deemed significant by the auditors, including those required by
Statement on Auditing Standards No. 61 (Codification of Statements on Auditing
Standards), as amended. In addition, the Audit Committee discussed with the
independent auditors their independence from the Company and its management,
including the matters in the written disclosures required by Independence
Standards Board Standard No. 1 (Independence Discussions with the Audit
Committees).
In reliance on the reviews and discussions outlined above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000, for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
James C. Yeh, Chairman
Gwong-Yih Lee
Peter T. Morris
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In the fiscal year ended December 31, 2000, the Company sold shares of its
convertible preferred stock in private financings as follows:
- 2,000,000 shares of Series B convertible preferred stock at $2.00 per
share in January 2000; and
- 5,000,000 shares of Series C convertible preferred stock at $5.50 per
share in July and August 2000.
Each share of convertible preferred stock converted automatically into one
share of Common Stock upon the closing of the Company's initial public offering
in November 2000. The purchasers of the convertible preferred stock included the
following directors, executive officers, holders of more than 5% of our
securities and their affiliated entities:
SHARES OF CONVERTIBLE
PREFERRED STOCK
-----------------------
INVESTOR SERIES B SERIES C
-------- -------- ---------
Peter C. Chang.............................................. 140,000(1) --
R. David Dicioccio.......................................... -- 100,000(2)
John M. Harland............................................. -- 21,500(3)
Entities affiliated with CPY & Associates................... 980,000(4) --
Foxconn Holding Limited..................................... 500,000 --
Entities affiliated with New Enterprise Associates.......... -- 2,000,000
- ---------------
(1) Consists of 140,000 shares held by Mr. Chang's brother.
(2) Purchased at $5.50 per share, compared to the deemed fair market value of
$11.76 per share at the time of the purchase.
(3) Purchased at $5.50 per share, compared to the deemed fair market value of
$11.76 per share at the time of the purchase and includes 12,000 shares held
in the name of Mr. Harland's minor children.
(4) Includes 400,000 shares held by CPY USA I, 275,000 shares held by CPY USA
II, 155,000 shares held by CPY International and 150,000 shares held by CPY
California.
In January 2000, prior to being elected a director, R. David Dicioccio was
engaged to provide financial advisory services as a consultant in exchange for
an option to purchase 150,000 shares of the Company's Common Stock at an
exercise price of $0.20 per share, vesting over two years beginning March 1,
2000. As of December 31, 2000, 93,750 shares of the option were unvested and the
fair value of the unvested shares was determined to be $547,500 using the
Black-Scholes option pricing model.
From mid-1999 through December 2000, Chiu Lan Sun, the wife of director
James C. Yeh, provided financial and strategic advisory services as a consultant
in exchange for an option to purchase 50,000 shares of the Company's Common
Stock at an exercise price of $0.20 per share. As of December 31, 2000, 25,000
shares of the option grant remained unexercised. The fair value of the
unexercised portion of the option was determined to be $146,000 using the
Black-Scholes option pricing model.
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PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed the firm of PricewaterhouseCoopers LLP as the Company's independent
auditors for the fiscal year ending December 31, 2001, subject to ratification
by the stockholders. PricewaterhouseCoopers LLP has audited the Company's
financial statements since July 1997. Representatives of PricewaterhouseCoopers
LLP are expected to be present at the Annual Meeting. They will have an
opportunity to make a statement, if they desire to do so, and will be available
to respond to appropriate questions.
AUDIT AND NON-AUDIT FEES
Audit Fees. The aggregate fees billed by PricewaterhouseCoopers LLP for
professional services rendered for the audit of the Company's annual financial
statements for fiscal year 2000 and the reviews of the financial statements
included in the Company's Form 10-K was $124,000. Less than 50% of the hours
expended on the engagement to audit the Company's financial statements for
fiscal year 2000 were attributed to work performed by persons other than
PricewaterhouseCoopers LLP's full-time, permanent employees.
Financial Information Systems Design and Implementation Fees. No fees were
billed for professional services rendered for information technology services
related to financial information systems design and implementation by
PricewaterhouseCoopers LLP for fiscal year 2000.
All Other Fees. The aggregate fees billed for services rendered by
PricewaterhouseCoopers LLP other than for the services described above,
including tax consulting, permitted internal audit outsourcing and other
non-audit services, for fiscal year 2000 was $28,000.
The Audit Committee considered whether the provision of the services other
than the audit services is compatible with maintaining PricewaterhouseCoopers
LLP's independence.
REQUIRED VOTE
Ratification will require the affirmative vote of a majority of the shares
present and voting at the Annual Meeting in person or by proxy. In the event
ratification is not obtained, the Board of Directors will review its future
selection of the Company's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 2002 Annual Meeting must be received by
the Secretary of the Company no later than December 19, 2001 in order that they
may be included in the Company's proxy statement and form of proxy relating to
that meeting.
A stockholder proposal not included in the Company's proxy statement for
the 2002 Annual Meeting will be ineligible for presentation at the meeting
unless the stockholder gives timely notice of the proposal in writing to the
Secretary of the Company at the principal executive offices of the Company and
otherwise complies with the provisions of the Company's Bylaws. To be timely,
the Bylaws provide that the Company must have received the stockholder's notice
not less than 60 days nor more than 90 days prior to the scheduled date of the
meeting. However, if notice or prior public disclosure of the date of the annual
meeting is given or made to stockholders less than 75 days prior to the meeting
date, the Company must receive the stockholder's notice by the earlier of (i)
the close of business on the 15th day after the earlier of the day the Company
mailed notice of the annual meeting date or provided public disclosure of the
meeting date and (ii) two days prior to the scheduled date of the annual
meeting.
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18
OTHER MATTERS
The Company knows of no other business that will be presented at the Annual
Meeting. If any other business is properly brought before the Annual Meeting, it
is intended that proxies in the enclosed form will be voted in accordance with
the judgment of the persons voting the proxies.
PAYMENT OF COSTS
The expense of printing, mailing proxy materials and solicitation of
proxies will be borne by the Company. In addition to the solicitation of proxies
by mail, solicitation may be made by directors, officers and other employees of
the Company by personal interview, telephone or facsimile. No additional
compensation will be paid to such persons for such solicitation. The Company
will reimburse brokerage firms and others for their reasonable expenses in
forwarding solicitation materials to beneficial owners of the Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
executive officers and any persons holding more than 10% of the Company's Common
Stock are required to report their initial ownership of the Company's Common
Stock and any subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been established
and the Company is required to identify in this Proxy Statement those persons
who failed to timely file these reports. To the Company's knowledge, based
solely on a review of such reports furnished to the Company and written
representations that no other reports were required during the fiscal year ended
December 31, 2000, all Section 16(a) filing requirements applicable to its
officers, directors and 10% stockholders were complied with, except that,
Messrs. Dicioccio, Harland, Morris, Tung and Yeh amended their Forms 3 in March
and April 2001 to reflect information inadvertently omitted from the original
filings. Mr. Lee is in the process of amending his Form 3 to reflect information
inadvertently omitted from the original filings.
Whether you intend to be present at the Annual Meeting or not, we urge you
to return your signed proxy promptly.
By order of the Board of Directors
/s/ PETER C. CHANG
Peter C. Chang
Secretary
April 18, 2001
THE COMPANY'S 2000 ANNUAL REPORT ON FORM 10-K HAS BEEN MAILED WITH THIS PROXY
STATEMENT. THE COMPANY WILL PROVIDE COPIES OF EXHIBITS TO THE ANNUAL REPORT ON
FORM 10-K, BUT WILL CHARGE A REASONABLE FEE PER PAGE TO ANY REQUESTING
STOCKHOLDER. ANY SUCH REQUEST SHOULD BE ADDRESSED TO THE COMPANY AT 735 NORTH
PASTORIA AVENUE SUNNYVALE, CALIFORNIA 94085, ATTENTION: INVESTOR RELATIONS
DEPARTMENT. THE REQUEST MUST INCLUDE A REPRESENTATION BY THE STOCKHOLDER THAT AS
OF MARCH 30, 2001, THE STOCKHOLDER WAS ENTITLED TO VOTE AT THE ANNUAL MEETING.
15
19
APPENDIX A
ALLIANCE FIBER OPTIC PRODUCTS, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee shall be appointed by the Board of Directors to assist
the Board in fulfilling its oversight responsibilities relating to the Company's
(1) financial statements and auditing, accounting and related reporting
processes and (2) systems of internal controls regarding finance, accounting,
legal compliance and ethics established by management and the Board.
COMPOSITION
The Audit Committee shall consist of at least three members of the Board,
each of whom shall meet the independence and experience requirements of
applicable laws, regulations, and stock market rules. The members of the Audit
Committee shall be appointed by the Board.
RESPONSIBILITIES
The Audit Committee shall:
DOCUMENTS/REPORTS REVIEW
- Review the annual audited financial statements with management and the
independent auditors, including major issues regarding accounting and
auditing principles and practices as well as the adequacy of internal
controls that could significantly affect the Company's financial
statements, and recommend that the audited financial statements be
included in the Company's Annual Report on Form 10-K.
- Review with management and the independent auditors the Company's
quarterly financial statements.
- Review with management and the independent auditors the significant
financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements and discuss any other
matters communicated to the Committee by the independent auditors.
- Prepare the report of the Audit Committee required by the rules of the
Securities and Exchange Commission to be included in the Company's annual
proxy statement.
ACCOUNTING AND FINANCIAL CONTROLS FRAMEWORK
- Review major changes to the Company's auditing and accounting principles
and practices as suggested by the independent auditors or management.
- Review with the independent auditors any management letter provided by
the independent auditors and the Company's responses to that letter.
INDEPENDENT AUDITORS
- Recommend to the Board the appointment of the independent auditors, which
firm is ultimately accountable to the Audit Committee and the Board.
- Approve the fees to be paid to the independent auditors.
- Receive disclosures from the independent auditors regarding the auditors'
independence required by Independence Standards Board Standard No. 1,
discuss such reports with the independent auditors, and, if so determined
by the Audit Committee, recommend that the Board take appropriate action
to satisfy itself of the independence of the auditors.
- Evaluate together with the Board the performance of the independent
auditors and, if so determined by the Audit Committee, recommend that the
Board replace the independent auditors.
A-1
20
- Meet with the independent auditors prior to the audit to review the
planning and staffing of the audit.
- Discuss with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
GENERAL AUTHORITY AND RESPONSIBILITIES
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Audit Committee may
request any officer or employee of the Company or the Company's outside counsel
or independent auditors to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditors. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditors or to
assure compliance with laws and regulations.
The Audit Committee shall review and reassess the adequacy of this Charter
annually and recommend any proposed changes to the Board.
A-2
21
PROXY PROXY
ALLIANCE FIBER OPTIC PRODUCTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
p The undersigned hereby authorizes PETER C. CHANG or JOHN M.
HARLAND, as Proxies with full power in each to act without the other and
r with the power of substitution in each, to represent and to vote all the
shares of stock the undersigned is entitled to vote at the Annual
o Meeting of Stockholders of Alliance Fiber Optic Products, Inc. (the
"Company") to be held at the Sunnyvale Sheraton Hotel, 1100 North
x Mathilda Avenue, Sunnyvale, California on May 18, 2001 at 2 p.m., or at
any postponement or adjournment thereof, and instructs said Proxies to
y vote as follows:
Shares represented by this proxy will be voted as directed by the
stockholder. IF NO SUCH DIRECTIONS ARE INDICATED, THE PROXIES WILL HAVE
THE AUTHORITY TO VOTE FOR THE ELECTION OF DIRECTORS, FOR PROPOSAL 2, AND
IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
- --------------- ---------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- --------------- ---------------
DETACH HERE
22
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PLEASE MARK
ELECTION OF DIRECTORS AND FOR PROPOSAL 2. [X] VOTES AS
IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2.
1. Proposal to elect Mr. Peter C. Chang and 2. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
Mr. R. David Dicioccio as directors of PricewaterhouseCoopers LLP as the [ ] [ ] [ ]
the Company to serve until the 2004 Company's independent auditors.
Annual Meeting of Stockholders or until
their successors are duly elected and 3. In their discretion, the Proxies are authorized to vote upon such
qualified. other business as may properly come before the meeting or any
adjournments thereof.
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
Instruction: To withhold authority to vote PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
for any individual nominee, write that ENVELOPE.
nominee's name in the space provided below:
MARK HERE Please sign where indicated below. When shares are held by joint tenants,
FOR both should sign. When signing as attorney, executor, administrator,
ADDRESS [ ] trustee or guardian, please give full title as such. If a corporation,
CHANGE AND please sign in full corporate name by an authorized officer. If a
NOTE BELOW partnership, please sign in full partnership name by an authorized
[ ] person.
-----------------------------------
For all nominees except as noted above
Signature: Date: Signature: Date:
----------------------------- --------------- ----------------------------------- --------------------